From Singapore to Vietnam, companies tap Southeast Asia in expansion drive
Taiwan's National Development Council led almost 30 startups to Singapore for a business expedition in November. (Startup Island Taiwan)
SINGAPORE -- Technology startups in Taiwan, home to some of the world's most dominant chipmakers, are sharpening their focus on ASEAN as the prospects of stability for doing business in China wane.
Young tech companies hoping to carve out a plan for regional growth are picking the 10-member Association of Southeast Asian Nations amid Taiwanese tensions with the Chinese mainland that have dimmed the outlook for thriving in Asia's largest economy.
The Taiwanese radar and anti-drone hardware startup Tron Future, founded in 2018, is among those from the island actively scouting for deals to seal in Southeast Asia. Given that its products have defense and military applications, the Chinese market has not held an appeal.
"Due to the nature of our company's industry, China is not a market we anticipate entering," Tron's Chief Executive Officer Yu-Jiu Wang told Nikkei Asia. "ASEAN countries such as Singapore and Vietnam have demands for drone detection. Therefore it will be a big reason for us to enter the market."
Through local distribution partners, Tron said, it has garnered sales in the two countries. It now plans to locate partners in Malaysia, Indonesia and the Philippines through which it can sell its wares and attain a stronger foothold in ASEAN.
The radar and anti-drone hardware company Tron Future is among the Taiwanese startups scouting Southeast Asia for deals to seal. © Photo courtesy of Tron Future
Taiwan's Minister of Economic Affairs Wang Mei-hua told Nikkei in November that Taiwanese companies invested more in Southeast and South Asia than in China for the first time in 2022. Taiwanese investments in those regions, including India, reached $5.2 billion last year, surpassing the $5 billion plowed into China.
Communist China has never ruled Taiwan but sees the island of 23.5 million people as its territory and has not ruled out using military force to seize it.
Many Taiwanese see themselves as distinct from the Chinese mainland, and political tensions have time and again kept the relationship between the two sides frosty.
Tensions have been seen in the field of business as well. Beijing in October urged Taiwanese companies operating in China to show "responsibility" after a probe was started into tech giant Foxconn over tax irregularities.
Taiwan's Foxconn is one of the largest contract producers of electronics globally and a key supplier for Apple's iPhones.
Amid the tensions, some Taiwanese startups are wasting no time in looking away from China to ASEAN as a driver for their growth.
Like Tron, the artificial intelligence-enabled software provider Gogolook, founded in 2012, has latched on to lucrative markets in Southeast Asia, where the management consulting firm Bain & Co. has projected the digital consumer population will grow from 370 million in 2022 to 402 million by 2027.
The Taiwanese startup says it has established its first Southeast Asian subsidiary in Thailand. Gogolook offers anti-fraud solutions that can be used by telecommunications companies and financial institutions.
"The Southeast Asian region has been undergoing digital transformation and has experienced a significant rise in scam-related issues, but there has been a lack of anti-scam solutions and technology." Gogolook's Chief Operating Officer Manwoo Joo told Nikkei. "With its large population base, Southeast Asia offers immense potential."
The software outfit was part of a delegation of close to 30 Taiwanese startups that were in Singapore in November seeking partnerships in the region, meeting with the likes of American tech giant Microsoft, venture capitalists and other startups in the city-state.
This delegation was led by Kao Shien-quey, the deputy minister of Taiwan's National Development Council, an agency overseeing efforts to help the island's startups access the global market. It was the first time that the council has led a business expedition to Singapore for Taiwanese startups.
Kao told Nikkei that the aim was to help young Taiwanese companies get into position to benefit from supply chains shifting toward ASEAN as talk continues about de-risking from China -- reducing reliance on the mainland, which has long been a base of manufacturing and production for many companies.
"Taiwan is a rules-based economy, and as we know, mainland China is manipulated by ... the leaders," she said. "The uncertainty of the regulations [also] will be a risk for the company or staff to do business there."
FunNow Group, which offers entertainment booking services and digital transformation solutions for merchants helped by AI, was another Taiwanese startup that Kao led to Singapore.
CEO Ting-Kuan Chen told Nikkei that his outfit currently derives more than 40% of its revenue from ASEAN markets, serving over 5,000 merchants.
The company sees opportunities for growth in Malaysia and Thailand, where digital payment and food delivery services have high penetration rates. Chen noted that in those markets, consumer consumption is growing and users are looking for better lifestyles.
"China ... is supermature and saturated," he said. "We decided to go to ASEAN to be the leader instead of competing with those internet giants in China."
Source: asia.nikkei.com
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